IT Supply Chain Developments and Their Impact on Buying Decisions

Here's the latest look at the IT market from Ian Nethercott, MCIPS, Supply Chain Director at IT digital marketplace Probrand, to help you with your IT purchasing decisions.

As we enter the second quarter of 2018, analysts have been crunching the figures for 2017’s year end. From shipment volumes to YoY market value, insights around ‘what’s hot and what’s not’ can help drive buying decisions in the months to come.

Crucially, buyers should not disregard certain product categories just because they have undergone a popularity drop. Depending on buyer requirements, this can turn into an opportunity to purchase older models that have been on the market for a few months, where the price has been pushed down by the introduction of newer products coming to market.

To help navigate the volatile and complex landscape of IT procurement, here are some of the latest developments and major movements that are impacting key IT product categories.

Exchange Rate

The euro ended up back where it started against the GBP this month. Starting at 0.8787, it underwent a long, slow decline, hitting a low of 0.8639 on April 17th before rising to 0.8771 by April 21st. It experienced a series of peaks and troughs from there and ended the month at 0.8792.

It was a more positive start for the euro against the US dollar in April, but things soon went downhill. Starting the month at 1.2320, the euro fell slightly to 1.2257 by April 6th, jumping up to 1.2370 on April 11th and then, after another slight fall, to 1.2376 by April 18th. It then crashed, hitting 1.2102 on April 27th and again to 1.2099 by the month’s close.

A report in The Times commented that the eurozone economy appears to be stuck, with the market going backwards over the past two months. The Financial Times echoed this and pointed towards downturns in key countries such as Germany, Spain, France and Italy. In a subsequent report, the Financial Times said that the Purchasing Manager’s Index (PMI) stalled at 55.2 in April, stopping a two-month decline but still much lower than January’s 58.8.

Phones and Tablets

IDC reported a fall in both EMEA smartphone shipments and market value YoY in 2017. Shipment volumes fell from 374m units in 2016 to 261m units, while value dropped from €101bn in 2016 to €96bn in 2017.

IHS claims that the adoption of under-display fingerprint sensors in smartphones will reach 9m units for 2018 and jump to 100m units by 2019.

The demand for new features is an important aspect – over time, the introduction of new products decreases the value of existing products. This can be a golden opportunity for buyers who aren’t necessarily driven by having the newest product and can purchase ‘new’ technology six months later at a more cost-effective price.

In tablet news, Gartner predicted that 2018 global shipments will grow by 10m units YoY, with the demand for premium models cited as the reason for the increase.

Traditional PCs

Gartner reported a drop in global PC shipments, falling 1.4% YoY in Q1 to 61.7m units, marking the segment’s 14th consecutive quarterly decline. HP led the market with 12.85m units in Q1, up 2.8% YoY and 20.8% market share, followed by Lenovo (+0.3% YoY to 12.34m units and 20% share), Dell (+6.5% to 9.88m and 16%), Apple (+1.5% to 4.26m and 6.9%) and Asus (-12.5% to 3.9m and 6.3%).

IDC on the other hand said Q1 PC shipments reached 60.4m units, recording a 0% YoY change and better than expected outcome. HP topped IDC’s list, followed by Lenovo, Dell, Acer and Apple.

Global personal computing device shipments – encompassing PCs, tablets, and mobile phones – fell 3% YoY in 2017 but are forecast to grow 1.3% to 2.3bn units in 2018. Gartner noted PCs will fall 3.9% YoY from 204m to 196m units in 2018, while premium ultramobiles will grow from 58m units to 67m and mobile phones up from 1.84bn units in 2017 to 1.87bn in 2018.

Memory

TrendForce said that oversupply of NAND Flash in Q1 2018 will continue into Q2, with prices on the decline despite overall demand set to increase.

Meanwhile, both V3 and ExtremeTech have reported that DRAM giants Samsung, Micron and SK Hynix (the big three responsible for some 96% of the NAND market), have been accused of price fixing, with a lawsuit filed in the USA stating that collusion to restrict supply in 2016 led to increases in memory prices.

Printers

According to IDC, Central and Eastern Europe recorded a 6.3% YoY large format printer shipment growth, but just 1% in value following an economic downtown in many Eastern European companies.

Global 3D printer shipments in Q4 reached 14% YoY growth to 132,000 units according to Context. The industrial segment buoyed the market with 39% YoY growth, and accounted for over 70% of printer revenue, up 44% YoY. Meanwhile, the personal market shows signs of slowing with just 10% YoY growth in shipments.